Brexit Overview

Neptune Shipping Agency LTD are members of BIFA which stands for the British International Freight Association. This is a Trade Association for companies registered in the UK that are responsible for arranging Freight and Transportation by Air, Road, Rail and Sea. With this membership we are provided with regular updates on how the Logistics and Transport Industry looks to emerge from the Brexit negotiations and how we will all be effected.

Several delegates from Neptune Shipping Agency LTD recently attended a BIFA forum to advise on the current state of affairs and what BIFA hope to see being discussed and agreed in regards to our Industry. This article will provide a summary of this meeting and aim to answer some questions which are looming in the face of Article 50 being triggered and declaring the intention of the United Kingdom to leave the European Union (EU) on 29th March 2019.

What has been made clear to us is that the entire process is far more complex than was initially believed on 23rd June 2016. BIFA believes that, at least in the short term, the UK will encounter difficulties from both a Customs and Trade perspective. Whilst an economical solution is the ideal resolution to any potential difficulties encountered relating to Customs and Trade, BIFA believes this will be resolved on a political platform.

It has been clearly stipulated by the Government that when we leave the EU we will leave the Single Market and the Customs Union. There are two long-term solutions presented following this, either a new customs partnership with the EU or a ‘highly streamlined customs agreement’ whereby the goods are cleared before they are even loaded. However, all this is dependent on negotiations and nothing can be guaranteed at this time. Leaving the single market and customs union also could result in the disappearance of the harmonised tariff and it is anticipated we will not participate in the TARIC, conditions relating to MEURSING codes for some food items, and also information relating to tariff quotas/ anti-dumping duty. However, BIFA anticipate the retention of the first 6 digits of the World Trade Organization (WTO) Harmonised System (HS). However, our membership of WTO is currently through the EU and not an independent one. BIFA are currently seeing if we will be able to revert to our original independent membership smoothly as this seems to be the prevailing opinion at Westminster, BIFA are being more conservative in their confidence of this.

The UK government propose to secure a Free Trade Agreement (FTA) with the EU. However, it was highlighted in the aforementioned meeting that FTA’s will still require a customs declaration. This means that customs declarations for EU goods coming into the UK are anticipated as a potential outcome.

Amongst all the uncertainty that seems to be the running theme with anything Brexit related, BIFA are certain that the Authorised Economic Operator (AEO) will remain, the nature of it may be subject to change but the institution will stay. AEO is a European wide Customs to Business Partnership which was introduced by the World Customs Organisation (WCO). Neptune Shipping Agency LTD are accredited by AEO which we received on 14.12.2016, this means we have voluntarily meet the standards set by this body and now benefit from this membership by allowing for a smoother customs process and preferable treatment over companies that have not met these standards when containers are placed a on hold.

There is also a high chance that the UK will become a Feeder Destination for Container Vessels. This may lead to delays with containers having to be transhipped at European Ports such as Rotterdam, Antwerp and Hamburg. Should we become a Feeder Country we are likely to experience longer transit times.

44% of UK trade is with Europe, 80% of which is distributed through Road Trailers with the majority of the drivers not being of UK nationality. This means that not only will our trade be impacted on by Customs, Access to Agreements and other clerical processes, we may simply not have the drivers to be able to perform the task as the Free Movement of People will inevitably be restricted. The main plan advertised by the Government is that the UK will be in a better position to negotiate the trade we currently have whilst outside the EU.

When it comes to negotiating there is a large difference in the number of objectives that each party are entering with, the UK has 12 compared to the 4 the EU has laid out. One major one that will be of interest to the Logistics and Transport Industry is that the Good Friday Agreement (The Belfast Agreement that ensured Northern Ireland would remain as part of the UK whilst maintaining close ties with Ireland through the Soft Borders) must be maintained. However, whilst the importance of Trade and Customs has been highlighted in the objectives, Transport has not been mentioned at this stage.

BIFA has set out what they would like to see from Brexit in order to protect their Members and the clients of such agencies:1. An agreement as close to the Single Market and Customs Union as possible as anything less than this will be detrimental to the UK 2. A transition period lasting a minimum of three years3. Resolve the issue of Citizens Rights as the Transport Industry relies heavily on Migrant Labour4. Have a Free Trade Agreement with the EU as the minimum standard5. The Union Customs Code should be implemented in full6. Preferably have continued access to the Pan EU Systems, Transit, EMCS, ICS and EORI database7. Remain members of the Aviation Security Regime8. Air agreement - either join the EU-US Open Skies or negotiate a similar agreement with the US and the EU9. Road – issue regulatory standards on Market-Truck Quotas, International Road Licencing, Employer Certifications, Vehicles Technical Standards, Cabotage, Infringements/Penalties and ensure continued alignment of standards.10. Maritime – Ship Registration, Cabotage, Emissions and SECA

Postponed VAT accounting is something that BIFA is keen to be introduced with the EU and the Rest of the World. Postponed VAT allows for Import VAT to be reported in the VAT return as due and deductible which means there is nil financial effect for the importer.

In addition to all of the above, upon leaving the EU, UK licensed airlines will lose the right to fly between the Member States as they will cease to be ‘Community Air Carriers’ which is outlined in Regulation (EC) Number 1008/2008. It is integral that an Open Skies agreement is agreed quickly as this will also impact on the EU as flight paths that stopover in the UK before making the flight to Europe will also be impacted. Security wise we are among the countries with the most stringent regulations in the EU, especially when looking at our airports and most of the EU systems stem from our own policies. However, despite the origin of the regulations, the UK will still be subjected to inspections to see if we are able to have an Aviation Agreement with the EU and uphold these practices.

There is still a lot of uncertainty surrounding this subject as it all depends on the outcome of negotiations as the trade deals cannot be officially discussed until we have left the EU, however it has also been mentioned by news outlets that the EU will not discuss any Trade Agreements with the UK until an exit fee has been agreed. The industry will unavoidably be impacted in a negative way, especially at Dover with the Trucks, but if the negotiations are conducted well this will hopefully only be for a short period of time.